JG/Finance Official Says Government Alcohol Monopoly Must Go

The government must break the monopoly that state alcohol importer PT Sarinah has on importing wine, beer and spirits, or else illegal shipments will continue to flood the country, a high-ranking official at the Finance Ministry has said.

Anwar Suprijadi, the director general of customs and excise at the ministry, said that the current system, which gives Sarinah sole licence to import alcoholic beverages, was being widely abused and cost the customs department hundreds of millions of dollars a year in unpaid duties.

Increasing the number of licences to import alcohol could bring bootleggers back into the system, giving the government hundreds of millions of dollars of additional tax revenue, he said.

Anwar spoke on Tuesday, the same day the ministry announced that it had discovered thousands of illegal bottles being smuggled into the country from Korea, though it did not specify whether it was North Korea or South Korea that was involved.

Anwar said the potential loss of state revenue from the shipment was still being investigated, but could be as much as Rp 750 million ($73,500).

The find is only the latest in a number of high-profile seizures of illegal beverages this year.

“At the moment, there is only one importer, which is Sarinah,” Anwar told reporters at one of the directorate’s offices in Jakarta. This, he added, helped create a black market in which people were pushed to break the law by smuggling in beverages and printing fake customs stamps.

“The motive [for smuggling alcohol] is to obtain the highest profit,” Anwar said. “We have been coordinating with fellow officials at the Trade Ministry. We urged them to issue import licences to other business so other entities can compete legally.”

The alcohol import monopoly, according to Anwar, created a “high-cost economy” for the product, meaning that legal alcoholic goods here were more expensive than in other countries.

A joint study by Dionisius Narjoko and Teguh Yudo Wicaksono, of the centre for Strategic and International Studies in Jakarta earlier this year, noted that tax revenue collected from Sarinah amounted to only Rp 62 billion a year, a miniscule figure considering the country’s size and estimated volume of alcoholic beverages consumed.

“This suggests extremely high volumes of either smuggled or illegal alcohol products,” the researchers said, noting that the current system did not maximize the collection of tax revenues.